Self Storage May Not Be Sexy But it Makes Money

Posted on Jan 9 2014 - 11:37pm by John Stevens

Everyone wishes they could come up with a doo-hickey or a thing-a-ma-bob or a watch-a-ma-call-it. You know what I mean; the kind of thing that is simple but used everywhere and often. It is the kind of thing that everyone never knew they had to have it until you came up with it, i.e. the stir stick, plastic swords for cocktails, the plastic part on the end of shoe laces. 

It’s the kind of thing that isn’t sexy like a new cell phone or the latest in state of the art gaming, but it still makes a whole lot of money. In the end, that’s what matters—profit; not coolness, but generating revenue.

The same is true in the business world as well. Yes, investors like to be in on the next coolest video game or tech device that everyone wants to have, but in the end what’s important is profit.

The self storage industry is a great example. When it comes to real estate it is not the ‘sexiest’ investment someone could make, but it has become one that has proven to be reliable.

“Self-storage isn’t as glamorous as a high-rise office building or a mall,” said Michael Scanlon, president and CEO of the Self Storage Association. “We’ve always been relegated to secondary status in the commercial real estate industry…”

Sexy, glamorous, secondary—whatever you want to call it the self storage industry has proven to be a reliable investment. How reliable? So much so that it compares with some of the ‘sexier’ industries rather well.

“The self-storage sector is sneaky big,” Scanlon said. “In 2013, all 30 teams in the NFL generated $9 billion in total revenue, while the music industry generated about $21 billion, and self-storage generated $24 billion.”

Investors are not the only ones that are seeing the value in self storage properties. Brokers are creating larger portfolios–along with selling individual facilities—in an effort to entice larger companies into investing. For example, Bancap Self Storage Group, Inc. has a 15-self storage facility portfolio that it is looking to sell for DSI Properties.

“The DSI 15 Property Self Storage Portfolio offers the investor a rare and unique opportunity to purchase a well-seasoned portfolio of single-story facilities with great visibility and tremendous upside potential,” said Dean Keller, President of Bancap Self Storage Group.

Bancap has dealt exclusively in self storage properties for over 30 years with more than $1 billion in transactions. This 15-facility portfolio is expected to make approximately $11.7 million in revenue over the next year.

Sources Used:

“15 Property Self Storage Portfolio for Sale in California and Colorado.” PRWeb; 09 January 2014.

“Investors Eye Self-Storage.” Nu Wire Investor; 06 January 2014.